Wage Theft Costing Low-Income Workers Billions

Americans toiling away in low-wage jobs already struggle to earn a living, and a new report says these meager paychecks are winnowed down by wage theft with alarming regularity.

Nearly $1 billion was recovered in 2012 by lawyers or regulatory agencies acting on behalf of workers who were paid below minimum wage, not paid for overtime or other wage and hour violations, according to a first-time analysis conducted by the left-leaning Economic Policy Institute. And the problem is growing, EPI analysts say.

Labor experts say they’re not surprised. “It seems likely that the recession would have intensified this problem,” said Ruth Milkman, a professor of sociology at the City University of New York Graduate Center.

Milkman was one of the authors of a 2009 study of low-wage workers in New York, Chicago and Los Angeles. About a quarter of workers surveyed said they had been paid below minimum wage within the last week. Three-quarters of those who worked more than 40 hours a week weren’t paid overtime.

“There’s been some increased effort to try and address this issue,” Milkman said. “Even with the increased enforcement, we found incredibly high violation rates at the bottom of the labor market.”

“There really is not much state local or federal enforcement going on, particularly in the low-wage industries where you’re not going to get attorneys to bring those cases.”

Even with these efforts by lawmakers and labor groups, “I think wage theft is increasing,” said Ross Eisenbrey, vice president at EPI and one of the authors of the new study. “There really is not much state local or federal enforcement going on, particularly in the low-wage industries where you’re not going to get attorneys to bring those cases.”

“The money recovered is just the tip of the iceberg,” said Tsedeye Gebreselassie, a senior staff attorney at the National Employment Law Project. The EPI report says if the 2009 study were extrapolated to the entire country’s low-wage labor market, wage theft could cost workers more than $50 billion every year.

“Resolving these wage theft complaints really relies on workers coming forward,” Gebreselassie says. Labor unions traditionally have acted as watchdogs for these kinds of violations, but they are largely out of the picture in today’s lowest-paying industries. This puts the onus on workers and advocacy groups to get the government’s attention, which isn’t easy.